Revenue increased 15% to $2.650 billion, 19% FX-neutral revenue growth
GAAP EPS increased 7% to $0.27 and non-GAAP EPS increased 11% on a
pro forma basis to $0.36
Announces strategic partnership with Visa
SAN JOSE, Calif.--(BUSINESS WIRE)--
Global technology platform and payments leader PayPal Holdings,
Inc. (Nasdaq:PYPL) today announced results for the second quarter ended
June 30, 2016. For the quarter, PayPal gained market share, expanded its
customer base, deepened engagement with customers and delivered on its
financial commitments. The company also announced a long-term
partnership agreement with Visa.
Financial highlights for the second quarter include:
-
Revenue growth of 15% to $2.650 billion, or 19% on a foreign currency
neutral (FX-neutral) basis
-
Revenue growth on a non-GAAP pro forma basis of 16%, or 19% on a
non-GAAP pro forma FX-neutral basis
-
GAAP operating margin of 14% with non-GAAP operating margin of 20%
-
GAAP earnings per diluted share (EPS) growth of 7% to $0.27, non-GAAP
EPS growth of 11% on a pro forma basis to $0.36
-
Operating cash flow of $696 million, free cash flow of $495 million
-
Returned $300 million to stockholders, repurchasing 8 million shares
of common stock
Operating highlights for the second quarter include:
-
Active customer accounts of 188 million, up 11%
-
1.4 billion transactions processed, up 25%
-
29 payment transactions per active account on a trailing twelve-month
basis, up 13%
-
$86 billion in total payment volume (TPV), up 28% on a spot basis, and
29% on an FX-neutral basis
"We have a clear mission at PayPal. We want to democratize financial
services and become an everyday, essential service for underserved
consumers," said Dan Schulman, President and CEO of PayPal. "We want to
use our platform and services to enable merchants to fully capitalize on
the move to mobile and digital commerce. Our strong financial
performance is one sign of the tangible and consistent progress we've
made towards achieving these goals. Our agreement with Visa enhances our
capabilities, offers the potential to establish new contexts for our
consumers and merchants, and lays the foundation for additional
partnerships."
PayPal and Visa Enter Partnership to Extend Customer Choice
PayPal and Visa announced a strategic partnership to expand their
long-standing relationship that will result in an improved and more
seamless shopping experience and greater choice in how consumers pay.
This agreement is a significant step towards offering greater customer
choice and flexibility for PayPal's customers.
PayPal will also gain access to Visa's tokenization services, starting
in the United States, for in-store PayPal transactions. This will expand
acceptance for PayPal's digital wallet to all physical retail locations
where Visa contactless transactions are enabled. The partnership's
benefits will include greater accessibility and volumes for Visa payment
instruments in the PayPal digital wallet.
PayPal also will ensure that data provided to issuers and their
cardholders for Visa-funded transactions will be consistent with the
information that each receives with a traditional Visa card transaction,
providing greater transparency and enhancing payment system security.
The agreement affords PayPal certain economic incentives, including
incentives for increased Visa volume, and greater long-term certainty on
fees paid to Visa, and further removes the threat of any fees or Visa
network rules being targeted solely at PayPal.
Gaining Market Share and New Merchant Customers
In the second quarter, PayPal gained market share and extended its
leadership position. PayPal processed $86 billion in TPV, representing
FX-neutral growth of 29%, which was substantially faster than the growth
rate of e-commerce. Merchant services TPV grew 36% on an FX-neutral
basis, and represented 83% of overall TPV for the quarter. PayPal
processed $24 billion in mobile payment volume, up 56%, representing 28%
of TPV for the quarter. Venmo, the company's social payments platform,
processed $3.9 billion of TPV, up 141%.
PayPal added notable new merchants to the platform, ending the quarter
with 14.5 million active merchant accounts. The list of leading brands
choosing PayPal now includes IKEA in multiple countries, Carnival
Corporation, VKontakte, Talbot's, Cathay Pacific and Eventbrite.
Extending PayPal's Customer Base and Deepening Engagement
As PayPal continues to grow larger and more relevant in customers' daily
lives, the company demonstrated another strong quarter of customer
acquisition, adding new consumers and merchants to the platform. The
company grew its active account base by 11% in the second quarter,
ending the quarter with 188 million active customer accounts.
Customers are engaged at higher levels than ever before. In the second
quarter, the company processed 1.4 billion payment transactions, which
translates to 29 payment transactions per active account, an increase
from 26 transactions per active account in the same period last year.
Expanding Innovative Products
One Touch is the most rapidly adopted product in PayPal's history. As of
the end of the second quarter, more than 25 million consumer accounts
have opted in to One Touch and more than two million merchants accounts
have enabled the product.
PayPal also extended the Pay with Venmo pilot in the quarter to
additional merchants including Parking Panda, Priv, Wish, Boxed, Hop
Market and Poshmark. PayPal expects to expand the Venmo pilot to all of
its Venmo users, and substantially more merchants later this year.
PayPal Working Capital continues to be an important product to engage
merchants and support their growth. In the second quarter, PayPal
Working Capital exceeded $2 billion in originations since the product
launched in September 2013 and has now funded more than 90,000 small
business merchants in the United States, United Kingdom and Australia.
Broadening PayPal's Global Reach
Xoom's U.S. customers can now send money to 53 countries. Xoom continues
to redefine global remittances through mobile technology, with 74% of
transactions being made on a mobile device in the second quarter.
In the second quarter, PayPal also expanded the European rollout of the
Vodafone wallet. Consumers in Spain and Italy can now tap and pay in
stores, another example of how PayPal is committed to partnership and
delivering consumer choice.
|
|
|
Second Quarter 2016 Financial Highlights
|
|
|
|
|
|
|
|
Second Quarter
|
|
(presented in millions, except per share data and percentages)
|
|
|
|
|
|
|
|
FX-Neutral YoY
|
|
|
|
2016
|
|
2015
|
|
YoY Growth
|
|
Growth
|
|
Total Payment Volume (TPV)
|
|
$86,208 |
|
$67,482 |
|
$18,726 |
|
28%
|
|
29%
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$2,650 |
|
$2,297 |
|
$353 |
|
15%
|
|
19%
|
|
Net income
|
|
$323 |
|
$305 |
|
$18 |
|
6%
|
|
N/A
|
|
Earnings per diluted share
|
|
$0.27 |
|
$0.25 |
|
$0.02 |
|
7%
|
|
N/A
|
|
Non-GAAP Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$2,650 |
|
$2,293 |
|
$357 |
|
16%
|
|
19%
|
|
Net income
|
|
$436 |
|
$395 |
|
$41 |
|
10%
|
|
N/A
|
|
Earnings per diluted share
|
|
$0.36 |
|
$0.32 |
|
$0.04 |
|
11%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Selected Financial and Operational Results
Operating Margin - GAAP operating margin for the second quarter
of 2016 decreased to 14.0%, compared to 17.3% for the same period last
year. Non-GAAP operating margin decreased to 19.9%, compared to non-GAAP
pro forma operating margin of 22.0% for the same period last year.
Taxes - The GAAP effective tax rate for the second quarter of
2016 was 15.0%, compared to 23.6% for the second quarter of 2015. The
non-GAAP effective tax rate was 18.8%, compared to the non-GAAP pro
forma effective tax rate of 21.9% for the second quarter of 2015.
Cash Flow - PayPal generated $696 million of operating cash flow
and $495 million of free cash flow during the second quarter of 2016.
Cash, Cash Equivalents and Investments - PayPal's cash, cash
equivalents and investments totaled $6.2 billion at June 30, 2016.
2016 Financial Guidance
Full Year 2016
-
PayPal raises full year 2016 revenue guidance to a range of $10.750 to
$10.850 billion.
-
PayPal expects revenue to grow 16% - 17% at current spot rates and 19%
- 20% on an FX-neutral basis.
-
PayPal expects GAAP earnings per diluted share in the range of $1.11 -
$1.14 and non-GAAP earnings per diluted share in the range of $1.47 -
$1.50.
-
Estimated non-GAAP amounts above for the twelve months ending December
31, 2016, reflect adjustments of approximately $585 - $615 million,
primarily including the following items: stock-based compensation
expense, employer payroll taxes on stock-based compensation, and
amortization of acquired intangible assets.
Third Quarter 2016
-
PayPal expects revenue to grow 16% - 18% at current spot rates and 19%
- 21% on an FX-neutral basis, to a range of $2.620 to $2.670 billion.
-
PayPal expects GAAP earnings per diluted share in the range of $0.25 -
$0.27 and non-GAAP earnings per diluted share in the range of $0.33 -
$0.35.
-
Estimated non-GAAP amounts above for the three months ending September
30, 2016, reflect adjustments of approximately $140 - $160 million,
primarily including the following items: stock-based compensation
expense, employer payroll taxes on stock-based compensation, and
amortization of acquired intangible assets.
Guidance for full year 2016 revenue growth rates represent
year-over-year comparisons versus non-GAAP pro forma measures. Please
see "Non-GAAP Financial Measures" and "Non-GAAP Measures of Financial
Performance" for important additional information.
Quarterly Conference Call and Webcast
PayPal Holdings, Inc. will host a conference call to discuss second
quarter 2016 results at 3:30 p.m. Pacific Time today. A live webcast of
the conference call, together with a slide presentation that includes
supplemental financial information and reconciliations of certain
non-GAAP and non-GAAP pro forma measures to their most directly
comparable GAAP measures, can be accessed through the company's Investor
Relations website at https://investor.paypal-corp.com.
In addition, an archive of the webcast will be accessible for 90 days
through the same link.
PayPal Holdings, Inc. uses its Investor Relations website (https://investor.paypal-corp.com),
its PayPal Stories Blog (https://www.paypal.com/stories/us),
Twitter handle (@PayPal), LinkedIn page (https://www.linkedin.com/company/paypal),
Facebook page (https://www.facebook.com/PayPalUSA/)
and YouTube channel (https://www.youtube.com/paypal)
as a means of disclosing information about the company and for complying
with its disclosure obligations under Regulation FD. The information we
post through these channels may be deemed material. Accordingly,
investors should monitor these channels in addition to PayPal's press
releases, SEC filings, public conference calls and webcasts.
About PayPal
At PayPal (Nasdaq:PYPL), we put people at the center of everything we
do. Founded in 1998, we continue to be at the forefront of the digital
payments revolution. PayPal gives people better ways to manage and move
their money, offering them choice and flexibility in how they are
able to send money, pay or get paid. We operate an open, secure and
technology agnostic payments platform that businesses use to securely
transact with their customers online, in stores and increasingly
on mobile devices. In 2015, 28% of the 4.9 billion payments we processed
were made on a mobile device. With our 188 million active customer
accounts, PayPal is a truly global payments platform that is available
to people in more than 200 markets, allowing customers to get paid in
more than 100 currencies, withdraw funds to their bank accounts in 56
currencies and hold balances in their PayPal accounts in 25 currencies.
For more information on PayPal, visit https://www.paypal.com/about.
For PYPL financial information, visit https://investor.paypal-corp.com.
Presentation
All growth rates represent year-over-year comparisons, except as
otherwise noted. FX-neutral results are calculated by translating the
current period's local currency results by the prior period's exchange
rate. FX-neutral growth rates are calculated by comparing the current
period's FX-neutral results by the prior period's results, excluding the
impact from hedging activities. All amounts in tables are presented in
U.S. dollars, rounded to the nearest millions, except as otherwise
noted. As a result, certain amounts may not sum or recalculate using the
rounded dollar amounts provided.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as
"non-GAAP financial measures" by the Securities and Exchange Commission
(SEC): non-GAAP net income, non-GAAP earnings per diluted share,
non-GAAP operating margin, non-GAAP effective tax rate and free cash
flow. In addition, the company has included certain pro forma
adjustments in its presentation of prior year non-GAAP net revenues,
non-GAAP net income, non-GAAP earnings per diluted share, and non-GAAP
operating margin in this presentation (collectively referred to as
"non-GAAP pro forma measures"). These adjustments reflect items that are
factually supportable, directly attributable to the separation of the
company from eBay Inc. on July 17, 2015, and expected to have a
continuing impact on the company's results of operations. The company
has included these pro forma adjustments because management believes
that they help to facilitate comparisons of the company's operating
results between periods. In discussing year-over-year comparisons,
including guidance net revenues growth rates, the company has chosen to
present non-GAAP pro forma measures because it believes that these
measures provide investors a consistent basis for reviewing the
company's performance across different periods. For an explanation of
the foregoing non-GAAP measures, please see "Non-GAAP Measures of
Financial Performance" included in this press release. These measures
may be different from non-GAAP financial measures used by other
companies. The presentation of this financial information, which is not
prepared under any comprehensive set of accounting rules or principles,
is not intended to be considered in isolation of, or as a substitute
for, the financial information prepared and presented in accordance with
generally accepted accounting principles (GAAP). For a reconciliation of
these non-GAAP financial measures to the most directly comparable GAAP
measures, see "Non-GAAP Measures of Financial Performance,"
"Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin,"
"Reconciliation of GAAP Net Income to Non-GAAP Net Income, GAAP Diluted
EPS to Non-GAAP Diluted EPS and GAAP Effective Tax Rate to
Non-GAAP Effective Tax Rate," "Reconciliation of Operating Cash Flow to
Free Cash Flow," "Reconciliation of GAAP Operating Margin to Non-GAAP
Pro Forma Operating Margin, GAAP Net Income to Non-GAAP Pro Forma Net
Income, and GAAP Diluted EPS to Non-GAAP Pro Forma Diluted EPS," and
"Reconciliation of GAAP Net Revenues by Type to Non-GAAP Pro Forma Net
Revenues by Type, and GAAP Net Revenues by Geography to Non-GAAP Pro
Forma Net Revenues by Geography" included in this press release.
Forward-Looking Statements
This press release contains forward-looking statements relating to,
among other things, the future performance of PayPal Holdings, Inc. and
its consolidated subsidiaries that are based on the company's current
expectations, forecasts and assumptions and involve risks and
uncertainties. These statements include, but are not limited to,
statements regarding expected financial results for third quarter and
the full year 2016 and future growth in the company's businesses. Actual
results could differ materially from those predicted or implied and
reported results should not be considered as an indication of future
performance. Factors that could cause or contribute to such differences
include, but are not limited to: changes in political, business and
economic conditions, including any regional general economic downturn or
crisis and any conditions that affect e-commerce growth; fluctuations in
foreign currency exchange rates; the uncertainty surrounding the
implementation effects, and impact of the United Kingdom's referendum in
favor of leaving the European Union ("Brexit"); the competitive,
regulatory, payment card association-related and other risks specific to
the company's PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant
products, especially as PayPal continues to expand geographically and
introduce new products and as new laws and regulations related to
payments and financial services come into effect; the company's ability
to successfully react to the increasing importance of mobile payments
and mobile commerce; the company's ability to deal with the increasingly
competitive environment for its businesses, including competition for
consumers and merchants; the company's need and ability to manage other
regulatory, tax and litigation risks as its products and services are
offered in more jurisdictions and applicable laws become more
restrictive; changes to the company's capital allocation or management
of operating cash; the impact of the company's customer choice
initiatives, including on its funding mix and transaction expense; the
company's need to manage an increasingly large enterprise with a broad
range of businesses of varying degrees of maturity and in many different
geographies; the effect of management changes and business initiatives;
any changes the company may make to its product offerings; the company's
ability to timely upgrade and develop its technology systems,
infrastructure and customer service capabilities at reasonable cost; the
company's ability to maintain stability and performance of its Payment
Platform while adding new products and features in a timely fashion; and
the company's ability to profitably integrate, manage and grow
businesses that have been acquired or may be acquired in the future. The
forward-looking statements in this release do not include the potential
impact of any acquisitions or divestitures that may be announced and/or
completed after the date hereof.
More information about factors that could affect the company's operating
results is included under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the company's annual report on Form 10-K, and subsequent
quarterly reports on Form 10-Q, copies of which may be obtained by
visiting the company's Investor Relations website at https://investor.paypal-corp.com
or the SEC's website at www.sec.gov.
All information in this release is as of July 21, 2016. Undue reliance
should not be placed on the forward-looking statements in this press
release, which are based on information available to the company on the
date hereof. The company assumes no obligation to update such statements.
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Combined and Consolidated Balance Sheet
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(In millions, except par value)
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,018
|
|
|
$
|
1,393
|
|
|
Short-term investments
|
|
|
2,939
|
|
|
|
2,018
|
|
|
Accounts receivable, net
|
|
|
167
|
|
|
|
137
|
|
|
Loans and interest receivable, net
|
|
|
4,507
|
|
|
|
4,184
|
|
|
Funds receivable and customer accounts
|
|
|
13,034
|
|
|
|
12,261
|
|
|
Prepaid expenses and other current assets
|
|
|
792
|
|
|
|
655
|
|
|
Total current assets
|
|
|
23,457
|
|
|
|
20,648
|
|
|
Long-term investments
|
|
|
1,315
|
|
|
|
2,348
|
|
|
Property and equipment, net
|
|
|
1,412
|
|
|
|
1,344
|
|
|
Goodwill |
|
|
4,069
|
|
|
|
4,069
|
|
|
Intangible assets, net
|
|
|
281
|
|
|
|
358
|
|
|
Other assets
|
|
|
97
|
|
|
|
114
|
|
|
Total assets
|
|
$
|
30,631
|
|
|
$
|
28,881
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
169
|
|
|
$
|
145
|
|
|
Funds payable and amounts due to customers
|
|
|
13,834
|
|
|
|
12,261
|
|
|
Accrued expenses and other current liabilities
|
|
|
1,181
|
|
|
|
1,179
|
|
|
Income taxes payable
|
|
|
39
|
|
|
|
32
|
|
|
Total current liabilities
|
|
|
15,223
|
|
|
|
13,617
|
|
|
Deferred tax liability and other long-term liabilities
|
|
|
1,591
|
|
|
|
1,505
|
|
|
Total liabilities
|
|
|
16,814
|
|
|
|
15,122
|
|
|
Equity:
|
|
|
|
|
|
Common stock, $0.0001 par value; 4,000 shares authorized; 1,207 and
1,224 outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Treasury stock at cost, 25 shares as of June 30, 2016 |
|
|
(896
|
)
|
|
|
—
|
|
|
Additional paid-in-capital
|
|
|
13,305
|
|
|
|
13,100
|
|
|
Retained earnings
|
|
|
1,356
|
|
|
|
668
|
|
|
Accumulated other comprehensive (loss) income
|
|
|
52
|
|
|
|
(9
|
)
|
|
Total equity
|
|
|
13,817
|
|
|
|
13,759
|
|
|
Total liabilities and equity
|
|
$
|
30,631
|
|
|
$
|
28,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Combined and Consolidated Statement of Income
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
2,650
|
|
$
|
2,297
|
|
$
|
5,194
|
|
$
|
4,434
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transaction expense
|
|
|
810
|
|
|
634
|
|
|
1,562
|
|
|
1,209
|
|
Transaction and loan losses
|
|
|
255
|
|
|
185
|
|
|
510
|
|
|
363
|
|
Customer support and operations(1) |
|
|
318
|
|
|
278
|
|
|
614
|
|
|
527
|
|
Sales and marketing (1) |
|
|
250
|
|
|
234
|
|
|
483
|
|
|
456
|
|
Product development (1) |
|
|
209
|
|
|
202
|
|
|
404
|
|
|
387
|
|
General and administrative (1) |
|
|
261
|
|
|
215
|
|
|
492
|
|
|
432
|
|
Depreciation and amortization (1) |
|
|
176
|
|
|
150
|
|
|
351
|
|
|
291
|
|
Restructuring
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
49
|
|
Total operating expenses
|
|
|
2,279
|
|
|
1,899
|
|
|
4,416
|
|
|
3,714
|
|
Operating income
|
|
|
371
|
|
|
398
|
|
|
778
|
|
|
720
|
|
Other income (expense), net
|
|
|
9
|
|
|
1
|
|
|
24
|
|
|
—
|
|
Income before income taxes
|
|
|
380
|
|
|
399
|
|
|
802
|
|
|
720
|
|
Income tax expense
|
|
|
57
|
|
|
94
|
|
|
114
|
|
|
160
|
|
Net income
|
|
$
|
323
|
|
$
|
305
|
|
$
|
688
|
|
$
|
560
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.27
|
|
$
|
0.25
|
|
$
|
0.57
|
|
$
|
0.46
|
|
Diluted
|
|
$
|
0.27
|
|
$
|
0.25
|
|
$
|
0.56
|
|
$
|
0.46
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1,210
|
|
|
1,218
|
|
|
1,213
|
|
|
1,218
|
|
Diluted
|
|
|
1,215
|
|
|
1,224
|
|
|
1,220
|
|
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
Customer support and operations
|
|
|
22
|
|
|
15
|
|
|
40
|
|
|
28
|
|
Sales and marketing
|
|
|
22
|
|
|
11
|
|
|
38
|
|
|
24
|
|
Product development
|
|
|
35
|
|
|
35
|
|
|
68
|
|
|
64
|
|
General and administrative
|
|
|
33
|
|
|
21
|
|
|
60
|
|
|
43
|
|
Depreciation and amortization
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
4
|
|
|
|
$
|
113
|
|
$
|
84
|
|
$
|
208
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Combined and Consolidated Statement of Cash
Flows
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(In millions)
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
323
|
|
|
$
|
305
|
|
|
$
|
688
|
|
|
$
|
560
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Transaction and loan losses
|
|
|
255
|
|
|
|
185
|
|
|
|
510
|
|
|
|
363
|
|
|
Depreciation and amortization
|
|
|
176
|
|
|
|
150
|
|
|
|
350
|
|
|
|
291
|
|
|
Stock-based compensation
|
|
|
111
|
|
|
|
83
|
|
|
|
206
|
|
|
|
162
|
|
|
Deferred income taxes
|
|
|
66
|
|
|
|
43
|
|
|
|
88
|
|
|
|
92
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
(31
|
)
|
|
|
(8
|
)
|
|
|
(32
|
)
|
|
|
(16
|
)
|
|
Gain on sale of principal loans receivable held for sale
|
|
|
(6
|
)
|
|
|
(30
|
)
|
|
|
(12
|
)
|
|
|
(30
|
)
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(8
|
)
|
|
|
(25
|
)
|
|
|
(30
|
)
|
|
|
(13
|
)
|
|
Receivable from eBay
|
|
|
—
|
|
|
|
80
|
|
|
|
—
|
|
|
|
42
|
|
|
Principal loans receivable held for sale, net
|
|
|
6
|
|
|
|
4
|
|
|
|
12
|
|
|
|
4
|
|
|
Accounts payable
|
|
|
9
|
|
|
|
25
|
|
|
|
22
|
|
|
|
38
|
|
|
Payable to eBay
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
(121
|
)
|
|
Income taxes payable
|
|
|
42
|
|
|
|
(7
|
)
|
|
|
37
|
|
|
|
35
|
|
|
Other assets and liabilities
|
|
|
(247
|
)
|
|
|
(175
|
)
|
|
|
(405
|
)
|
|
|
(241
|
)
|
|
Net cash provided by operating activities
|
|
|
696
|
|
|
|
622
|
|
|
|
1,434
|
|
|
|
1,166
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(201
|
)
|
|
|
(231
|
)
|
|
|
(334
|
)
|
|
|
(425
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
11
|
|
|
Changes in principal loans receivable, net
|
|
|
(356
|
)
|
|
|
427
|
|
|
|
(476
|
)
|
|
|
408
|
|
|
Purchases of investments
|
|
|
(6,118
|
)
|
|
|
(8,891
|
)
|
|
|
(10,209
|
)
|
|
|
(11,252
|
)
|
|
Maturities and sales of investments
|
|
|
5,139
|
|
|
|
3,071
|
|
|
|
9,335
|
|
|
|
5,641
|
|
|
Acquisitions, net of cash acquired
|
|
|
—
|
|
|
|
(273
|
)
|
|
|
(19
|
)
|
|
|
(273
|
)
|
|
Funds receivable and customer accounts
|
|
|
(270
|
)
|
|
|
1,316
|
|
|
|
222
|
|
|
|
789
|
|
|
Notes and receivable from eBay
|
|
|
—
|
|
|
|
631
|
|
|
|
—
|
|
|
|
575
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(1,806
|
)
|
|
|
(3,939
|
)
|
|
|
(1,481
|
)
|
|
|
(4,526
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
51
|
|
|
|
—
|
|
|
|
57
|
|
|
|
—
|
|
|
Purchases of treasury stock
|
|
|
(300
|
)
|
|
|
—
|
|
|
|
(896
|
)
|
|
|
—
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
31
|
|
|
|
8
|
|
|
|
32
|
|
|
|
16
|
|
|
Contribution from (to) eBay
|
|
|
—
|
|
|
|
3,812
|
|
|
|
—
|
|
|
|
3,829
|
|
|
Tax withholdings related to net share settlements of equity awards
|
|
|
(79
|
)
|
|
|
—
|
|
|
|
(94
|
)
|
|
|
—
|
|
|
Borrowings (repayments) under financing arrangements
|
|
|
—
|
|
|
|
(754
|
)
|
|
|
(21
|
)
|
|
|
(873
|
)
|
|
Funds payable and amounts due to customers
|
|
|
841
|
|
|
|
441
|
|
|
|
1,579
|
|
|
|
774
|
|
|
Net cash provided by financing activities
|
|
|
544
|
|
|
|
3,507
|
|
|
|
657
|
|
|
|
3,746
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
1
|
|
|
|
7
|
|
|
|
15
|
|
|
|
(25
|
)
|
|
Net increase in cash and cash equivalents
|
|
|
(565
|
)
|
|
|
197
|
|
|
|
625
|
|
|
|
361
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
2,583
|
|
|
|
2,365
|
|
|
|
1,393
|
|
|
|
2,201
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,018
|
|
|
$
|
2,562
|
|
|
$
|
2,018
|
|
|
$
|
2,562
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
12
|
|
|
Cash paid for income taxes
|
|
$
|
12
|
|
|
$
|
26
|
|
|
$
|
36
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
Unaudited Summary of Combined and
Consolidated Net Revenues
We earn revenue from the following types of transactions:
-
Transaction revenues: Net transaction fees charged to consumers
and merchants based on the volume of activity processed through our
Payments Platform, including our PayPal, PayPal Credit, Venmo,
Braintree and Xoom products.
-
Other value added services: Net revenues derived principally
from interest and fees earned on our PayPal Credit loans receivable
portfolio, subscription fees, gateway fees, gain on sale of
participation interest in certain consumer loans receivable, revenue
share we earn through partnerships, interest earned on certain PayPal
customer account balances, fees earned through our Paydiant products
and other services that we provide to consumers and merchants.
|
|
|
Net Revenues by Type
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
(In millions, except percentages)
|
|
Transaction revenues(1) |
|
$
|
2,323
|
|
|
$
|
2,238
|
|
|
$
|
2,262
|
|
|
$
|
1,982
|
|
|
$
|
1,966
|
|
|
Current quarter vs prior quarter
|
|
|
4
|
%
|
|
|
(1
|
)%
|
|
|
14
|
%
|
|
|
1
|
%
|
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
|
18
|
%
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
13
|
%
|
|
|
15
|
%
|
|
Percentage of total
|
|
|
88
|
%
|
|
|
88
|
%
|
|
|
88
|
%
|
|
|
88
|
%
|
|
|
86
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other value added services(1) |
|
|
327
|
|
|
|
306
|
|
|
|
294
|
|
|
|
276
|
|
|
|
327
|
|
|
Current quarter vs prior quarter
|
|
|
7
|
%
|
|
|
4
|
%
|
|
|
7
|
%
|
|
|
(16
|
)%
|
|
|
47
|
%
|
|
Current quarter vs prior year quarter
|
|
|
—
|
%
|
|
|
37
|
%
|
|
|
30
|
%
|
|
|
25
|
%
|
|
|
21
|
%
|
|
Percentage of total
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues(1) |
|
$
|
2,650
|
|
|
$
|
2,544
|
|
|
$
|
2,556
|
|
|
$
|
2,258
|
|
|
$
|
2,293
|
|
|
Current quarter vs prior quarter
|
|
|
4
|
%
|
|
|
—
|
%
|
|
|
13
|
%
|
|
|
(2
|
)%
|
|
|
7
|
%
|
|
Current quarter vs prior year quarter
|
|
|
16
|
%
|
|
|
19
|
%
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
|
|
|
(1) Q2'15 net revenues are presented on a non-GAAP pro
forma basis to reflect the impact of lower transaction revenues
from payment services provided by PayPal to eBay as the result of
the terms of certain commercial agreements negotiated between the
parties that stipulate lower transaction fees than those
historically charged to eBay. For a reconciliation to GAAP net
revenues, please see "Reconciliation of GAAP Net Revenues by Type
to Non-GAAP Pro Forma Net Revenues by Type, and GAAP Net Revenues
by Geography to Non-GAAP Pro Forma Net Revenues by Geography"
included in the press release.
|
|
|
|
|
|
|
|
Net Revenues by Geography
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
(In millions, except percentages)
|
|
U.S. net revenues(1)(2) |
|
$
|
1,407
|
|
|
$
|
1,343
|
|
|
$
|
1,302
|
|
|
$
|
1,138
|
|
|
$
|
1,167
|
|
|
Current quarter vs prior quarter
|
|
|
5
|
%
|
|
|
3
|
%
|
|
|
14
|
%
|
|
|
(2
|
)%
|
|
|
14
|
%
|
|
Current quarter vs prior year quarter
|
|
|
21
|
%
|
|
|
31
|
%
|
|
|
25
|
%
|
|
|
20
|
%
|
|
|
19
|
%
|
|
Percent of total
|
|
|
53
|
%
|
|
|
53
|
%
|
|
|
51
|
%
|
|
|
50
|
%
|
|
|
51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International net revenues(1)(2) |
|
|
1,243
|
|
|
|
1,201
|
|
|
|
1,254
|
|
|
|
1,120
|
|
|
|
1,126
|
|
|
Current quarter vs prior quarter
|
|
|
3
|
%
|
|
|
(4
|
)%
|
|
|
12
|
%
|
|
|
(1
|
)%
|
|
|
2
|
%
|
|
Current quarter vs prior year quarter
|
|
|
10
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
13
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
18
|
%
|
|
|
17
|
%
|
|
|
18
|
%
|
|
Percent of total
|
|
|
47
|
%
|
|
|
47
|
%
|
|
|
49
|
%
|
|
|
50
|
%
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues(1)(2) |
|
$
|
2,650
|
|
|
$
|
2,544
|
|
|
$
|
2,556
|
|
|
$
|
2,258
|
|
|
$
|
2,293
|
|
|
Current quarter vs prior quarter
|
|
|
4
|
%
|
|
|
—
|
%
|
|
|
13
|
%
|
|
|
(2
|
)%
|
|
|
7
|
%
|
|
Current quarter vs prior year quarter
|
|
|
16
|
%
|
|
|
19
|
%
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
|
19
|
%
|
|
|
23
|
%
|
|
|
21
|
%
|
|
|
19
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net revenues are attributed to U.S. and
international geographies primarily based upon the country in
which the merchant is located, or in the case of a cross border
transaction, may be earned from each of the respective countries
in which the consumer and merchant reside. Net revenues earned
from value added services are typically attributed to the country
in which either the consumer or the merchant reside.
|
|
|
|
(2) Q2'15 net revenues are presented on a non-GAAP pro
forma basis to reflect the impact of lower transaction revenues
from payment services provided by PayPal to eBay as the result of
the terms of certain commercial agreements negotiated between the
parties that stipulate lower transaction fees than those
historically charged to eBay. For a reconciliation to GAAP net
revenues, please see "Reconciliation of GAAP Net Revenues by Type
to Non-GAAP Pro Forma Net Revenues by Type, and GAAP Net Revenues
by Geography to Non-GAAP Pro Forma Net Revenues by Geography"
included in the press release.
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Supplemental Operating Data
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
(In millions, except percentages)
|
|
Active customer accounts(1) |
|
|
188
|
|
|
|
184
|
|
|
|
179
|
|
|
|
173
|
|
|
|
169
|
|
|
Current quarter vs prior quarter
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
Current quarter vs prior year quarter
|
|
|
11
|
%
|
|
|
11
|
%
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of payment transactions(2) |
|
|
1,448
|
|
|
|
1,414
|
|
|
|
1,428
|
|
|
|
1,216
|
|
|
|
1,161
|
|
|
Current quarter vs prior quarter
|
|
|
2
|
%
|
|
|
(1
|
)%
|
|
|
17
|
%
|
|
|
5
|
%
|
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
|
25
|
%
|
|
|
26
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment transactions per active account(3) |
|
|
29.4
|
|
|
|
28.4
|
|
|
|
27.5
|
|
|
|
26.9
|
|
|
|
26.1
|
|
|
Current quarter vs prior quarter
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
|
13
|
%
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payment Volume(4) |
|
$
|
86,208
|
|
|
$
|
81,056
|
|
|
$
|
81,523
|
|
|
$
|
69,738
|
|
|
$
|
67,482
|
|
|
Current quarter vs prior quarter
|
|
|
6
|
%
|
|
|
(1
|
)%
|
|
|
17
|
%
|
|
|
3
|
%
|
|
|
7
|
%
|
|
Current quarter vs prior year quarter
|
|
|
28
|
%
|
|
|
29
|
%
|
|
|
23
|
%
|
|
|
20
|
%
|
|
|
19
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
|
29
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
|
|
27
|
%
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Expense Rate(5) |
|
|
0.94
|
%
|
|
|
0.93
|
%
|
|
|
0.92
|
%
|
|
|
0.93
|
%
|
|
|
0.94
|
%
|
|
Transaction and Loan Loss Rate(6) |
|
|
0.30
|
%
|
|
|
0.31
|
%
|
|
|
0.30
|
%
|
|
|
0.29
|
%
|
|
|
0.29
|
%
|
|
Transaction Margin(7) |
|
|
59.8
|
%
|
|
|
60.4
|
%
|
|
|
61.1
|
%
|
|
|
62.3
|
%
|
|
|
63.8
|
%
|
|
|
|
(1) An active customer account is a registered account
that successfully sent or received at least one payment or payment
reversal through our Payments Platform, excluding transactions
processed through our gateway and Paydiant products, in the past
12 months.
|
|
|
|
(2) Payment transactions is the total number of
payments, net of payment reversals, successfully completed through
our Payments Platform, excluding transactions processed through
our gateway and Paydiant products.
|
|
|
|
(3) Number of payment transactions per active customer
account reflects the total number of payment transactions within
the previous 12 month period, divided by active customer accounts
at the end of the period.
|
|
|
|
(4) Total Payment Volume or "TPV" is the value of
payments, net of payment reversals, successfully completed through
our Payments Platform, excluding transactions processed through
our gateway and Paydiant products.
|
|
|
|
(5) Transaction expense rate is calculated by dividing
transaction expense by TPV.
|
|
|
|
(6) Transaction and loan loss rate is calculated by
dividing transaction and loan loss by TPV.
|
|
|
|
(7) Transaction margin is total revenue less
transaction expense and transaction and loan loss, divided by
total revenue.
|
|
|
|
Q2'15 transaction expense rate, transaction and loan loss rate,
and transaction margin include the impact of pro forma adjustments
directly attributable to the separation of the company from eBay
Inc. on July 17, 2015 had they existed historically.
|
|
|
PayPal Holdings, Inc.
Non-GAAP Measures of Financial
Performance
To supplement the company's condensed consolidated financial statements
presented in accordance with generally accepted accounting principles,
or GAAP, the company uses non-GAAP measures of certain components of
financial performance. These non-GAAP measures include non-GAAP net
income, non-GAAP earnings per diluted share, non-GAAP operating margin,
non-GAAP effective tax rate and free cash flow. In addition, the company
has included certain pro forma adjustments in its prior year
presentation of non-GAAP net revenues, non-GAAP net income, non-GAAP
earnings per diluted share, and non-GAAP operating margin in this
presentation (collectively referred to as "non-GAAP pro forma
measures"). These adjustments reflect items that are factually
supportable, directly attributable to the separation of the company from
eBay Inc. on July 17, 2015, and expected to have a continuing impact on
the company's results of operations. The company has included these pro
forma adjustments because management believes that they help to
facilitate comparisons of the company's operating results between
periods. In discussing year-over-year comparisons, the company has
chosen to present non-GAAP pro forma measures because it believes that
these measures provide investors a consistent basis for reviewing the
company's performance across different periods.
These non-GAAP measures are not in accordance with, or an alternative
to, measures prepared in accordance with GAAP and may be different from
non-GAAP measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules or
principles. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with the company's results of
operations as determined in accordance with GAAP. These measures should
only be used to evaluate the company's results of operations in
conjunction with the corresponding GAAP measures.
Reconciliation to the most directly comparable GAAP measure of all
non-GAAP measures included in this press release can be found in the
tables included in this press release.
These non-GAAP measures are provided to enhance investors' overall
understanding of the company's current financial performance and its
prospects for the future. Specifically, the company believes the
non-GAAP measures provide useful information to both management and
investors by excluding certain expenses, gains and losses, as the case
may be, that may not be indicative of its core operating results and
business outlook. In addition, because the company has historically
reported certain non-GAAP results to investors, the company believes
that the inclusion of non-GAAP measures provides consistency in the
company's financial reporting.
For its internal budgeting process, and as discussed further below, the
company's management uses financial measures that do not include
stock-based compensation expense, employer payroll taxes on stock-based
compensation, amortization or impairment of acquired intangible assets,
impairment of goodwill, significant gains or losses from the
disposal/acquisition of a business, certain effects of the separation
from eBay, certain gains and losses on investments,
restructuring-related charges and the income taxes associated with the
foregoing. In addition to the corresponding GAAP measures, the company's
management also uses the foregoing non-GAAP measures in reviewing the
financial results of the company.
The company excludes the following items from non-GAAP net income,
non-GAAP earnings per diluted share, non-GAAP operating margin and
non-GAAP effective tax rate:
Stock-based compensation expense and related employer payroll taxes.
This consists of expenses for equity awards under our equity incentive
plans. We exclude stock-based compensation expense from our non-GAAP
measures primarily because they are non-cash expenses that management
does not believe are reflective of ongoing operating results. The
related employer payroll taxes are dependent on our stock price and the
timing and size of exercises and vesting of equity awards, over which
management has limited to no control, and as such management does not
believe it correlates to the operation of our business.
Amortization or impairment of acquired intangible assets, impairment
of goodwill, and transaction expenses from the acquisition or disposal
of a business. We incur amortization or impairment of acquired
intangible assets and goodwill in connection with acquisitions and may
incur significant gains or losses from the acquisition or disposal of a
business and therefore exclude these amounts from our non-GAAP measures.
We exclude these items because management does not believe they are
reflective of our ongoing operating results.
Restructuring. These consist of expenses for employee severance
and other exit and disposal costs. The company excludes significant
restructuring charges primarily because management does not believe they
are reflective of ongoing operating results.
Other certain significant gains, losses, or charges that are not
indicative of the Company's core operating results. These expenses
are significant gains, losses, or charges during a period that are the
result of isolated events or transactions which have not occurred
frequently in the past and are not expected to occur regularly or be
repeated in the future. The company excludes these amounts from its
results primarily because management does not believe they are
indicative of its current or ongoing operating results.
Separation. These are significant expenses related to the
separation of PayPal from eBay Inc. into an independent publicly traded
company. These consist primarily of third-party consulting fees, legal
fees, employee retention payments and other income and expenses incurred
to complete the separation.
Tax effect of non-GAAP adjustments. This amount is used to
present stock-based compensation and the other amounts described above
on an after-tax basis consistent with the presentation of non-GAAP net
income.
The company also uses free cash flow, a non-GAAP measure. Free cash flow
represents operating cash flows less purchases of property and
equipment. The company considers free cash flow to be a liquidity
measure that provides useful information to management and investors
about the amount of cash generated by the business after the purchases
of property, buildings, and equipment, which can then be used to, among
other things, invest in the company's business, make strategic
acquisitions, and repurchase stock. A limitation of the utility of free
cash flow as a measure of financial performance is that it does not
represent the total increase or decrease in the company's cash balance
for the period.
In addition to the non-GAAP measures discussed above, the Company also
analyzes certain measures, including net revenues and operating
expenses, on an FX-neutral basis to better measure the comparability of
operating results between periods. The Company believes that changes in
foreign currency exchange rates are not indicative of the Company's
operations and evaluating growth in net revenues and operating expenses
on an FX-neutral basis provides an additional meaningful and comparable
assessment of these measures to both management and investors.
FX-neutral results are calculated by translating the current period's
local currency results by the prior period's exchange rate. FX-neutral
growth rates are calculated by comparing the current period's FX-neutral
results by the prior period's results, excluding the impact from hedging
activities.
|
|
|
PayPal Holdings, Inc.
|
|
Reconciliation of GAAP Operating Margin to Non-GAAP Operating
Margin
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
(In millions, except percentages)
|
|
|
|
(unaudited)
|
|
GAAP operating income
|
|
$
|
371
|
|
|
$
|
398
|
|
|
Stock-based compensation expense and related employer payroll taxes
|
|
|
122
|
|
|
|
89
|
|
|
Acquisition related transaction expense
|
|
|
—
|
|
|
|
3
|
|
|
Separation
|
|
|
—
|
|
|
|
9
|
|
|
Restructuring
|
|
|
—
|
|
|
|
1
|
|
|
Amortization of acquired intangible assets
|
|
|
35
|
|
|
|
20
|
|
|
Total non-GAAP operating income adjustments
|
|
|
157
|
|
|
|
122
|
|
|
Non-GAAP operating income
|
|
$
|
528
|
|
|
$
|
520
|
|
|
Non-GAAP operating margin
|
|
|
19.9
|
%
|
|
|
22.6
|
%
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Non-GAAP Net Income,
|
|
GAAP Diluted EPS to Non-GAAP Diluted EPS,
|
|
and GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
(In millions, except percentages)
|
|
GAAP income before income taxes
|
|
$
|
380
|
|
|
$
|
399
|
|
|
GAAP income tax expense
|
|
|
57
|
|
|
|
94
|
|
|
GAAP net income
|
|
|
323
|
|
|
|
305
|
|
|
Non-GAAP adjustments to net income:
|
|
|
|
|
|
Non-GAAP operating income adjustments (see table above)
|
|
|
157
|
|
|
|
122
|
|
|
Tax effect of non-GAAP adjustments
|
|
|
(44
|
)
|
|
|
(19
|
)
|
|
Non-GAAP net income
|
|
$
|
436
|
|
|
$
|
408
|
|
|
|
|
|
|
|
|
Non-GAAP net income per diluted share
|
|
$
|
0.36
|
|
|
$
|
0.33
|
|
|
Shares used in non-GAAP diluted share calculation(1)(2) |
|
|
1,215
|
|
|
|
1,224
|
|
|
|
|
|
|
|
|
GAAP effective tax rate
|
|
|
15
|
%
|
|
|
24
|
%
|
|
Tax effect of non-GAAP adjustments to net income
|
|
|
4
|
%
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
Non-GAAP effective tax rate
|
|
|
19
|
%
|
|
|
22
|
%
|
|
|
|
|
|
|
|
(1) Non-GAAP net income per diluted share for the three
months ended June 30, 2015 is based on the number of shares of
PayPal common stock outstanding on July 17, 2015, the distribution
date from eBay.
|
|
|
|
(2) Non-GAAP net income per diluted share for the three
months ended June 30, 2016 is based on the weighted average number
of common shares outstanding for the period.
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Reconciliation of GAAP Operating Margin to Non-GAAP Pro Forma
Operating Margin,
|
|
GAAP Net Income to Non-GAAP Pro Forma Net Income,
|
|
and GAAP Diluted EPS to Non-GAAP Pro Forma Diluted EPS
|
|
|
|
|
|
Three Months Ended June 30, 2015
|
|
|
|
|
|
|
Non-GAAP
|
|
|
Non-
|
|
|
Pro Forma
|
|
|
Non-GAAP Pro
|
|
|
|
|
GAAP
|
|
|
Entries
|
|
|
GAAP
|
|
|
Adjustments
|
|
|
Forma
|
|
|
|
|
(In millions, except percentages and per share amounts/unaudited)
|
|
|
Net revenues
|
|
$
|
2,297
|
|
|
|
—
|
|
|
|
$
|
2,297
|
|
|
|
$
|
(4
|
)
|
(g)
|
|
$
|
2,293
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction expense
|
|
|
634
|
|
|
|
—
|
|
|
|
|
634
|
|
|
|
|
—
|
|
|
|
|
634
|
|
|
|
Transaction and loan losses
|
|
|
185
|
|
|
|
—
|
|
|
|
|
185
|
|
|
|
|
12
|
|
(h)
|
|
|
197
|
|
|
|
Customer support and operations
|
|
|
278
|
|
|
|
(15
|
)
|
(a)
|
|
|
261
|
|
|
|
|
5
|
|
(h)(i)(j)
|
|
|
266
|
|
|
|
|
|
|
|
|
(2
|
)
|
(f)
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
234
|
|
|
|
(11
|
)
|
(a)
|
|
|
223
|
|
|
|
|
(12
|
)
|
(l)
|
|
|
211
|
|
|
|
Product development
|
|
|
202
|
|
|
|
(35
|
)
|
(a)
|
|
|
167
|
|
|
|
|
—
|
|
|
|
|
167
|
|
|
|
General and administrative
|
|
|
215
|
|
|
|
(21
|
)
|
(a)
|
|
|
179
|
|
|
|
|
2
|
|
(h)
|
|
|
181
|
|
|
|
|
|
|
|
|
(3
|
)
|
(m)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
(f)
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
150
|
|
|
|
(2
|
)
|
(a)
|
|
|
128
|
|
|
|
|
4
|
|
(k)
|
|
|
132
|
|
|
|
|
|
|
|
|
(20
|
)
|
(c)
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
1
|
|
|
|
(1
|
)
|
(e)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total operating expense
|
|
|
1,899
|
|
|
|
(122
|
)
|
|
|
|
1,777
|
|
|
|
|
11
|
|
|
|
|
1,788
|
|
|
|
Operating income
|
|
|
398
|
|
|
|
122
|
|
|
|
|
520
|
|
|
|
|
(15
|
)
|
|
|
|
505
|
|
|
|
Other income (expense), net
|
|
|
1
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
Income before income taxes
|
|
|
399
|
|
|
|
122
|
|
|
|
|
521
|
|
|
|
|
(15
|
)
|
|
|
|
506
|
|
|
|
Income tax expense
|
|
|
94
|
|
|
|
19
|
|
(d)
|
|
|
113
|
|
|
|
|
(2
|
)
|
(m)
|
|
|
111
|
|
|
|
Net income (loss)
|
|
$
|
305
|
|
|
|
$
|
103
|
|
|
|
$
|
408
|
|
|
|
$
|
(13
|
)
|
|
|
$
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.25
|
|
|
|
|
|
|
$
|
0.33
|
|
|
|
|
|
|
$
|
0.32
|
|
|
|
Diluted
|
|
$
|
0.25
|
|
|
|
|
|
|
$
|
0.33
|
|
|
|
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1,218
|
|
(n)
|
|
|
|
|
|
1,218
|
|
(n)
|
|
|
|
|
|
1,218
|
|
(n)
|
|
Diluted
|
|
|
1,224
|
|
(n)
|
|
|
|
|
|
1,224
|
|
(n)
|
|
|
|
|
|
1,224
|
|
(n)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
17
|
%
|
|
|
6
|
%
|
|
|
|
23
|
%
|
|
|
|
(1
|
)%
|
|
|
|
22
|
%
|
|
|
Effective tax rate
|
|
|
24
|
%
|
|
|
(2
|
)%
|
|
|
|
22
|
%
|
|
|
|
—
|
%
|
|
|
|
22
|
%
|
|
|
|
|
Notes
|
|
(a) Stock-based compensation expense
|
|
(b) Employer payroll taxes on stock-based compensation
|
|
(c) Amortization of acquired intangible assets
|
|
(d) Income taxes associated with certain non-GAAP entries
|
|
(e) Restructuring charges
|
|
(f) Separation related
|
|
(g) Reflects the impact of lower transaction revenues from payment
services provided by PayPal to eBay as the result of the terms of
certain commercial agreements negotiated between the parties that
stipulate lower transaction fees than those historically charged
to eBay.
|
|
(h) Reflects the effect of the Protection program losses and
service costs that were historically reimbursed to PayPal by eBay
for the administration of eBay's customer protection programs.
Following the distribution, this program is no longer being
administered by PayPal, and therefore these costs will not be
reimbursed by eBay. PayPal's customer protection programs have
been extended to its customers' purchases on eBay, and therefore
PayPal expects to incur incremental costs associated with its
customer protection programs.
|
|
(i) Reflects the impact of additional costs for shared data
centers and information technology facilities, except for the
facilities in Phoenix, Arizona, and Denver, Colorado, that will
continue to be managed by eBay after the separation pursuant to
the colocation services agreements.
|
|
(j) Reflects the reversal of historically allocated amounts from
eBay to PayPal related to data center facilities in Phoenix,
Arizona, and Denver, Colorado, pursuant to the colocation services
agreements.
|
|
(k) Reflects depreciation expense related to data center
facilities in Phoenix, Arizona, and Denver, Colorado, pursuant to
the colocation services agreements.
|
|
(l) Reflects the net reduction of costs charged to PayPal by eBay
for referral services and user penetration.
|
|
(m) Acquisition related transaction expense
|
|
(n) Reflects the tax effect of pro forma adjustments using the
respective statutory tax rate for the quarter ended June 30, 2015.
|
|
(o) The weighted average number of common shares outstanding for
basic and diluted earnings per share for the period is based on
the number of shares of PayPal common stock outstanding as of July
17, 2015, the distribution date from eBay.
|
|
|
|
|
|
Reconciliation of GAAP Net Revenues by Type to Non-GAAP Pro Forma
Net Revenues by Type,
|
|
and GAAP Net Revenues by Geography to Non-GAAP Pro Forma Net
Revenues by Geography
|
|
|
|
|
|
Net Revenues by Type
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
(In millions/unaudited)
|
|
Transaction revenues
|
|
$
|
2,323
|
|
$
|
2,238
|
|
$
|
2,262
|
|
$
|
1,982
|
|
$
|
1,970
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
Non-GAAP pro forma transaction revenues
|
|
|
2,323
|
|
|
2,238
|
|
|
2,262
|
|
|
1,982
|
|
|
1,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other value added services
|
|
$
|
327
|
|
$
|
306
|
|
$
|
294
|
|
$
|
276
|
|
$
|
327
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Non-GAAP pro forma other value added services
|
|
|
327
|
|
|
306
|
|
|
294
|
|
|
276
|
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,650
|
|
$
|
2,544
|
|
$
|
2,556
|
|
$
|
2,258
|
|
$
|
2,297
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
Total non-GAAP pro forma net revenues
|
|
|
2,650
|
|
|
2,544
|
|
|
2,556
|
|
|
2,258
|
|
|
2,293
|
|
|
|
|
(1) Reflects the impact of lower transaction revenues
from payment services provided by PayPal to eBay as the result of
the terms of certain commercial agreements negotiated between the
parties that stipulate lower transaction fees than those
historically charged to eBay.
|
|
|
|
|
|
|
|
Net Revenues by Geography
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
(In millions/unaudited)
|
|
U.S. net revenues
|
|
$
|
1,407
|
|
$
|
1,343
|
|
$
|
1,302
|
|
$
|
1,138
|
|
$
|
1,170
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
Total non-GAAP pro forma U.S. net revenues
|
|
|
1,407
|
|
|
1,343
|
|
|
1,302
|
|
|
1,138
|
|
|
1,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International net revenues
|
|
$
|
1,243
|
|
$
|
1,201
|
|
$
|
1,254
|
|
$
|
1,120
|
|
$
|
1,127
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Total non-GAAP pro forma International net revenues
|
|
|
1,243
|
|
|
1,201
|
|
|
1,254
|
|
|
1,120
|
|
|
1,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,650
|
|
$
|
2,544
|
|
$
|
2,556
|
|
$
|
2,258
|
|
$
|
2,297
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
Total non-GAAP pro forma net revenues
|
|
|
2,650
|
|
|
2,544
|
|
|
2,556
|
|
|
2,258
|
|
|
2,293
|
|
|
|
|
(1) Reflects the impact of lower transaction revenues
from payment services provided by PayPal to eBay as the result of
the terms of certain commercial agreements negotiated between the
parties that stipulate lower transaction fees than those
historically charged to eBay.
|
|
|
|
|
|
Reconciliation of Operating Cash Flow to Free Cash Flow
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(In millions/unaudited)
|
|
Net cash provided by operating activities
|
|
$
|
696
|
|
|
$
|
622
|
|
|
$
|
1,434
|
|
|
$
|
1,166
|
|
|
Less: Purchases of property and equipment
|
|
|
(201
|
)
|
|
|
(231
|
)
|
|
|
(334
|
)
|
|
|
(425
|
)
|
|
Free cash flow
|
|
$
|
495
|
|
|
$
|
391
|
|
|
$
|
1,100
|
|
|
$
|
741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160721006255/en/
PayPal
Investor Relations Contact
Gabrielle Rabinovitch
Senior
Director, Investor Relations
grabinovitch@paypal.com
or
Media
Relations Contact
Martha Cass, 416-860-6213
Senior Director,
Corporate Communications
mcass@paypal.com
Source: PayPal Holdings, Inc.
News Provided by Acquire Media